In healthcare, information is not only private, it is proprietary. While doctors and patients yearn for a digital and unified patient health record, the infrastructure required to accomplish this doesn’t exist yet.

A blockchain could be a public catalog of health records that references databases, fitness and medical devices, mobile phones, and laptops. It could be used to connect every patient, healthcare provider, and payer to a secure, yet public network.

A blockchain also could enable the interoperability of private health networks. Users would be able to trust the blockchain infrastructure in a healthcare context because it would automate the integrity of the data exchange. Not only would users know if their data had been manipulated, they would see exactly how it was done.

A Brief History of Falling ShortOver the past century, we’ve introduced innovations in an attempt to reform American healthcare, but for the most part have been disappointed by the results. These innovations have included employer sponsored coverage, the Social Security Act, Health Maintenance Organizations (HMO) Act, and the Affordable Care Act (ACA).1 Despite persistent efforts to the contrary, national healthcare expenditure (NHE) continues to rise per capita and as a percent of GDP. The situation may not improve, with analysts projecting NHE to grow 5.8% annually through 2025, at which point it will be roughly 20% of GDP.2 With the rise of blockchain technology a new promise is on the horizon for healthcare, but will the results succeed where past innovations have failed?

Blockchain Technology’s Potential Value to HealthcareIntroduced to the world through Bitcoin, blockchain technology provides a distributed database for managing unique digital assets among multiple parties.3 Transacting bitcoin is merely an exchange of data using a blockchain, which opens the possibility of securely managing and transferring many types of data over unsecured channels.

Importantly, the technology does not require participating parties to trust one another with their data, because trust automation is built into the way information is appended to a blockchain. A blockchain ensures that information is immutable once appended and that all parties have a complete log of network activity. Because each stakeholder has the same view of the complete ledger, blockchains could become the basis of trust that underpins information exchange between related and unrelated parties.

Since the code underlying Bitcoin is open source, it has been downloaded and modified innumerable times to construct purpose-built blockchains that can secure and transmit different kinds of data. Recently, blockchain engineers and companies have been exploring how this technology can be applied to non-financial use cases, including universal digital identities,4 supply chain management,5 and healthcare orchestration.6 In other words, blockchain technology has evolved beyond finance, and should be considered a general purpose technology.7

Blockchain technology is in its infancy and has many nuances. That said, its potential within healthcare is becoming clear, perhaps most importantly as a way to facilitate electronic health record (EHR) operability. We believe that by using blockchain technology, the following three major features of EHR systems can be enhanced:

Immutability via File Integrity

Cybersecurity via Data Access Management

Interoperability via Collaborative Version Control

In a time of increased electronic data, blockchain technology can organize access to that data in such a way that it can be recorded and verified only through consensus of all parties involved. For clinicians, blockchains can support universal identifiers for any data entered into an EHR, which is then available to other authorized providers and care team members. Patients can monitor their own health information, approving, denying or sharing changes to their data, ensuring a higher level of privacy and engagement. Researchers will benefit from better data integrity and reliability, creating a ‘platform of trust’ for data sharing. Payers will have better data reconciliation, fewer errors and frauds, reduced administrative and claim processing costs, and the potential to reach underserved markets.8

To describe what’s possible with blockchain technology, we can imagine a situation where a patient, Alice, faints and knocks her head while hiking in Oregon. While her primary care doctor, Dr. Nguyen, is unavailable, she can give her emergency room doctor, Dr. Francis, access to her EHR by adding him as a permissioned user. The blockchain records this change in “permissioning” and enables Dr. Francis to view Alice’s EHR temporarily, and append information to it without changing the original EHR. Alice can authorize the same permissioning to her wearable device, if that information is useful to Dr. Francis. At the end of a predetermined window, Dr. Francis’ access to the EHR would close. Alice’s primary care doctor, Dr. Nguyen, then would have a complete and verified record of all events the next time he speaks with her, as would her insurance payer.

We will dive deeper into the specifics of a blockchain implementation relevant to EHRs after further describing the current landscape of healthcare information technology (IT). To avoid classic hype cycle thinking, it is important to first understand the existing landscape before unrealistic solutions are proposed.

ARK's statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. For a list of all purchases and sales made by ARK for client accounts during the past year that could be considered by the SEC as recommendations, click here. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. For full disclosures, click here.